Which of the following is recognized as an expense under defined contribution plan?
a) Actuarial g/l
b) Periodic contributions to the plan
c) Service costs incurred during the period
OA is B
Why is C) incorrect? Isn’t it that service costs go through income statement both under IFRS and GAAP?
I agree, sercive costs are recognised in the income statement unde both, IFRS and US GAAP.
Where is the question from?
There are no service costs in a DC plan.
Service costs are the future benefits earned by the employees from their work (service) during the year; it’s an expense in a DB plan, but not in a DC plan. (There are no future benefits earned in a DC plan.)
Ah, totally missed that. Thanks S2000.
My pleasure.